Welcome Back Goldilocks: Market Sees Growth Not too Hot, Not too Cold

The market consensus sees growth for the US economy—the Goldilocks kind of growth, while MoneyShow's Jim Jubak is still waiting for the three bears to come home with the May employment figures on Friday.

That market consensus—that the economy is set to run not so weak that revenue and earnings won't grow in the second quarter, but not so strong that the Federal Reserve will speed up its taper—is back.

According to the Institute for Supply Management—you know, the folks who needed three tries on Monday to get the seasonal adjustment right for their manufacturing index—the service sector of the US economy expanded at its fastest pace in nine months.

That was backed up in the 2:00PM New York Time release of the Federal Reserve's Beige Book review of regional economies that showed strengthening growth in the Cleveland and St. Louis Federal Reserve regions and moderate growth in Boston, New York, Richmond, Chicago, Minneapolis, Dallas, and San Francisco. Only the Kansas City region showed slowing growth.

The ADP employment survey this morning came in at 179,000 net new jobs created in May, slightly below the 200,000 consensus forecast by economists surveyed by Briefing.com and slightly below the 215,000 new jobs in April.

With the market in love with Goldilocks, though, this was seen as good news since it indicates that growth is not about to surge and create a problem for the bond market.

The government will announce its May employment figures on Friday, June 6. The consensus among economists surveyed by Briefing.com is that the US economy created a net 220,000 new jobs in May. That would be down from April's 288,000 but would be enough to sustain belief that the slowdown in first quarter growth was a temporary blip caused by cold weather and that GDP growth will rebound to a 3%, or so, rate in the second quarter.